Don’t Pour Profits Down the Drain

Draft beer is a big money-maker for bar owners, but what if I told you that you could be making even more money?

Steve Hershberger, director of Marketing and Founder/CEO of SteadyServ, a draft management system that enables you to view and analyze your retail location’s draft beer data on any device, believes we’re all currently operating in a “broken system.”

Rather than making data-driven decisions on sales, product purchases, and what to put on tap, on-premise owners are using guesswork and basing decisions on incorrect guidance. “Drafts typically represent two times the margin and one to two times the revenue for beer-centric bars that have more than ten taps,” says Hershberger. “But how much more money could you be making if you were making good decisions? If you know what’s going on inside your four walls, you can make better decisions.”

SteadyServ arms its users with this invaluable knowledgeable through “kegonomics.” Kegs are monitored, and the data is fed into the iKeg application, which offers a real-time view into your current tap lineup, accurate keg levels, monitoring of draft sales and performance, and other analytics.

SteadyServ also offers digital menus that display keg levels and information about the beers on tap. “Our job is to help you maximize the draft mix that you’ve got, the amount of sale and share that comes from that draft, and supplement that in the most appropriate ways in the share mix from bottles and cans,” say Hershberger.

He believes that establishments who don’t start tracking and monitoring their sales data will fold or be bought out by larger chains. “If you’re not being proactive and thinking about your customers, products, and experience, and what information is available to you, in a strategic way, you’re going to get marginalized,” he says.

So just what are the solutions to repairing this broken system? It starts with focusing on data to determine what to put on tap, improving the quality of the beer, reducing waste, and doing more to drive sales.

What’s On Tap?

It’s become more important than ever to have the right mix on tap since more and more patrons choose their bar based on what they can get on draft. “Ten years ago, the average person made their destination decision based on three things: proximity, price, and food,” says Hershberger. “Today, it’s proximity, rating, and beverage. People are making decisions about where they’re going to go based on what’s on tap.”

So how do you choose? For one, be sure you have a diversity of styles
on tap. “Beer styles should not be overly redundant,” says Scott Hempstead, Director of National On-Premise Accounts, Boston Beer Company. “If there are four IPAs on tap, and no seasonal or wheat beer, nix one IPA and replace it with an alternative style.”

But it’s also important to know your clientele and what they want. “You want to get the right mix for the patrons that are coming to your establishment,” says Hershberger, who stresses that mix should be based on what you’re selling and how it compares to what’s being sold around you.

Being aware of the current trends can go a long way in properly managing your taps and in selling. “The [brewing companies] are helping to market the product—follow their trends. They’ve done half the work, so support them,” says Michael Manion, CEO of TurboTap.

One of the current trends you’re probably aware of is the explosion
of craft beer, and as a result, a multitude of offerings. But while the craft
beer drinker often seeks out variety, Hempstead cautions against the frequent switching of taps, “If draft lines rotate too frequently, it can be confusing to drinkers and also wait staff. We recommend that no more than 20-25% of taps should rotate. Rotating beers too often can slow down knowledgeable and quick service.”

Sales Secrets

Knowledgeable wait staff is often half the battle in selling beer, as wait staff can be misinformed about the style or how much of a beer is left.

Availability and visibility is key here. “It’s important that bar owners evaluate which draft beers are listed and how they’re featured on a menu,” says Hempstead. “When a guest first sits down, they wonder, ‘what am I going to drink?’ Beverage options on a menu should be first and foremost—not at the back of the menu!”

With SteadyServ, digital menus aim to not only display information about what’s on tap (beer type, ABV, etc), but also how much is left in a keg. The company is also getting ready to launch SteadyServ TV, which will include social video content and contextual ads based on what’s selling. Bars will be able to put their draft menus on social media feeds and interact with customers.

“They can track and promote products to influential customers,” says Hershberger. “We can drive the insight to say, not only should you be carrying this and not that, but here’s what you should be advertising and promoting and pushing out to the social sphere so when those people see it, they’re coming to you versus somebody else.”

Hempstead maintains that training is also important. “We find that the best way to help bar owners sell more beer is to help train staff, not just about beer itself, but how to properly store, serve, and pair it,” he says. “We’ve found that when servers and bartenders can speak intelligently about what craft beers are available, and the beer itself is the best it can be—fresh, proper temperature, clean draft lines, etc.—the customer will have a great drinking experience and continue to order draft beer.”

The quality of the beer is paramount, and the new TurboTap 2.0 patented beer faucet aims to help maintain the quality of the pour. “Beer is very difficult—it’s pressure, temperature, and cleanliness,” says Manion. “If any of those three are out of wack, it’s hard to pour beer. We really help that process.”

The improvements made to TurboTap in this new 2.0 version include attaching the faucet to the tap so that it is one piece, which allows it to fit on any beer tower and makes it easier to clean. It’s also been shortened to 3.25 inches so that almost any glass can fit under the faucet.

The high-grade stainless steel faucet better controls the flow of the beer with fluid dynamics that deliver beer to the bottom of the glass for the perfect pour with a consistent temperature. “If your beer is really hot, it’s going to pour foamy, but we’re going to help that process. So as the pressure changes in that keg, we pour consistently through the whole keg,” explains Manion.

Of course, even the most perfect pour won’t help a low-performing beer, but Hershberger warns against the knee-jerk reaction to slash the price. “If you want to get rid of product, you promote it. You don’t discount it,” he says.

Promotions can come in the form of beer and food pairings. “I believe that you don’t just sell alcohol—you sell alcohol with food and entertainment,” says Manion.

Hempstead agrees. “Beer can cut, contrast, and complement food,” he says. “By suggesting a pairing on the menu—like Rebel IPA and buffalo wings, or Summer Ale and fried fish—the customer has an easy and expert-recommended ordering option.”

Eliminating Waste

One of the easiest ways to make more money from draft beer—and coincidentally where the most money is often lost—is in reducing waste. Because you can’t see inside of a keg, it’s quite difficult to determine how much beer is left and how fresh the beer is, which can lead staff to throw it out prematurely.

SteadyServ’s system measures keg levels to help owners determine how much is left and how long it has been sitting. “We help our customers lower their waste by 25-35%, which means that the beer they paid for, that they were previously throwing away—whether it was in shrinkage, residual beer in the kegs, or overpours—they’re now selling to other people,” says Hershberger. “That’s free money.”

TurboTap 2.0 also aims to eliminate costly waste through a better pouring system. “You get more out of your kegs. The industry standard is about 70%; we get you up to a solid 10% more than that as our standard is between 90-95% out of your keg,” says Manion. “We’ll save you enough to pay for at least half of your next keg, if not the whole thing.”

Making money on draft beer all comes down to control and better management. “[Draft beer] is a beautiful thing,” says Hempstead, “and when handled correctly, it’s a great experience.”

By Ashley Bray

Photos (top to bottom): Shutterstock.com, Boston Beer Company, SteadyServ, TurboTab.